China Herald

Internet crackdown caused by more freedoms - Jeremy Goldkorn

fons.tuinstra@gmail.com (Fons Tuinstra) — Mon, 08 Feb 2010 09:49:00 +0000

Jeremy Goldkorn by Fantake via Flickr

Getting it right when it concerns China and the internet is not easy, but media-watcher Jeremy Goldkorn of Danwei gives it a good shot. Yes, there are unprecedented constraints on the internet in China, but they were triggered of when the close to 400 million internet users in the country took equally unprecedented freedom, he tells Sfgate.

"In the last year ... the liberal elements, the forces for change on the Internet have become more vocal and better at using tools like Twitter than they ever were," said Jeremy Goldkorn, founder of Danwei.org, a blog about Chinese media and urban life. "But this has been met with sort of the biggest sustained clampdown on the Internet that we've seen for years."

Google threat to leave China, unless it can work uncensored, has drawn massive attention, and a prompt refusal by the Chinese central government to give in. According to Goldkorn, here in the Money Times, Google is asking for a special treatment, giving it an advantage over its domestic competitor Baidu:

"Baidu does face the same censorship issues, but without the corporate culture that resents censorship."

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Jeremy Goldkorn is a speaker at the China Speakers Bureau. When you need him at your conference or other meetings, do get in touch.

More reasons why China will not collapse - Shaun Rein

fons.tuinstra@gmail.com (Fons Tuinstra) — Thu, 04 Feb 2010 08:49:00 +0000

Shaun Rein by Fantake via Flickr

The story that China will collapse sells books and magazines, but according to Shaun Rein the bubble in the real estate is not going to be that trigger. In Forbes he tells why some of the doomsday sayers are wrong:

Why? Because China's underground economy is far bigger than the 10% to 20% of the total economy that most economists estimate when they do their calculations. Politically the government can't admit that. A decade ago the U.S. Treasury estimated that 50% of Russia's economy stayed underground, evading onerous taxes. China's underground economy as a portion of the overall economy is at least as large as Russia's. Many company executives keep three sets of accounting records: one for official purposes, one for investors and one for themselves.

It does not mean Shaun Rein is taking all the figures that are published for granted: he accept that much of the basic data collection do have serious flaws:

It would be politically impossible for the government to say just how large the underground economy is without causing clashes among the responsible ministries. The government is, however, actively cracking down on receipt forging and tax evasion and is implementing new tax and receipt policies that will force cash businesses like restaurants to pay more based on their actual business results.

It is true that certain sectors in China's economy are overheating and that there are structural economic issues that need to be addressed. But predictions of doom and gloom in China by Jim Chanos and his ilk are largely exaggerated. China is no Dubai. The growth is real.

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Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your conference, do get in touch.

'A Changing China' now available

fons.tuinstra@gmail.com (Fons Tuinstra) — Wed, 03 Feb 2010 08:20:00 +0000

The book 'A Changing China', written by a selection of the speakers at the China Speakers Bureau is now available for purchase. Not yet in a bookstore nearby, but most certainly at Amazon. In the book more than a dozen China veterans tell how they have seen China change. With contributions of Kaiser Kuo, Shaun Rein, Janet Carmosky, Zhang Lijia and many others. A historical overview from many different angles.

Zhang Lijia, touring Europe

fons.tuinstra@gmail.com (Fons Tuinstra) — Sun, 31 Jan 2010 12:50:00 +0000

Image by Fantake via Flickr

Best-selling author Zhang Lijia of the book "Socialism Is Great!": A Worker's Memoir of the New China
has been touring Europe, including Italy, France and the first reports on her book tour are coming in. Here Zhang Lijia is in Milan, explaining Italian media how China is changing, how it needs stability for the entrepreneurial drive to flourish.

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Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch.

Protectionism in China not rising - Shaun Rein

fons.tuinstra@gmail.com (Fons Tuinstra) — Thu, 28 Jan 2010 10:02:00 +0000

Image by Getty Images via Daylife

Google threatened to leave China, Goldman Sachs is having its own affair with a state-owned company and the European Chamber of Commerce in China challenged in September the country's trade barriers. Is protectionism rising in China, wonders Shaun Rein in his latest column in Forbes. While acknowledging some of the problems, Rein asks for a reality check:

Is the situation really that bad? Overall, China's economy remains fairly open for most sectors. The government fears that a trade war could collapse the export sector and is going out of its way to be more open. Consider its subdued response to Google, and its statement that it won't let the issue hurt bilateral trade and relations. There are places where the government encourages investment and places where it doesn't. The reality is that you need to know which is which, for foreign firms will continue to be boxed out of certain industries like media that the government considers sensitive and where well-connected elites dominate....

Shaun Rein by Fantake via Flickr
So worries of increasing protectionism are largely unfounded. But is the dominance of state-owned enterprises starting to return? After all, the government has been pushing for consolidation in the steel, mining and dairy sectors. But that fear, too, is largely exaggerated.

More in Forbes.

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Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your conference? Do get in touch.

And in case you have not seen enough of Shaun Rein: here at CNBC he explains why Chinese capital is expected to move into real estate in the US and Dubai, later this year.

Expected in your store: China brands - Shaun Rein

fons.tuinstra@gmail.com (Fons Tuinstra) — Wed, 27 Jan 2010 09:47:00 +0000

Shaun Rein by Fantake via Flickr

Famous Chinese brands have not yet reached many European or American stores, but that is going to change, writes Shaun Rein in BusinessWeek, although not overnight. He disagrees with the US journalist James Fallows who says that unlike US companies, Chinese firms have been unable to create themselves a global market. Fallows' argument: China is not yet a leading economic power, unlike what many Americans think.
Shaun Rein:

In several hundred interviews my firm (the China Market Research Group) conducted with senior executives of consumer products companies, just over 50% said they expected to enter the U.S. in five years, but only after first targeting their home market, where retail sales are growing 15% a year, and regions like Africa and the Middle East, where local competition is weak. In the next five years, Americans should be prepared to start seeing Chinese brands on the shelves of Wal-Mart (WMT)and not just the Made in China label.

More - and different - arguments in BusinessWeek.

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Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your conference? Do let us know.

Real estate: China's catch-22 - Victor Shih

fons.tuinstra@gmail.com (Fons Tuinstra) — Wed, 27 Jan 2010 08:47:00 +0000

Victor Shih by Fantake via Flickr

Real estate are the main source for local governments to get money, and the lingering crisis because of excessive spending might be hard to solve, says Victor Shih in NPR. China is having a property crisis of its own, much different from that in the United States, but no less severe, he argues:

"The entities that are doing the leveraging in China are not individual people, but instead local government entities which have borrowed trillions from the banking system to develop real estate projects in the first place," says Victor Shih, an expert on China at Northwestern University.

Shih has been researching local governments' finances in China. He says, for example, that about half of the Shanghai government's revenues come from land sales. Because local governments need this income, he fears that measures to cool the real estate market might not work.

"Local governments now are forming their own real estate developers and would actually buy land from itself. As this becomes more common — and it is becoming very, very common — then local governments have a high stake in maintaining and increasing the value of real estate in their own jurisdiction," he says. "Therefore, I think local governments may intentionally ignore a lot of measures that are meant to deflate real estate prices."

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Victor Shih is a speaker at the China Speakers Bureau. Do you want to share his insights at your conference? Do get in touch.

Dating: hunting for the top - James Farrer

fons.tuinstra@gmail.com (Fons Tuinstra) — Tue, 26 Jan 2010 07:36:00 +0000

James Farrer by Fantake via Flickr

Online dating in China is becoming very competitive, tells James Farrer of the Sophia University in Tokyo in a CNN article on online dating for the rich, both for men and women.

"Men at the bottom of the social hierarchy are going to have very few chances to meet women," said James Farrer, author of "Opening Up: Youth Sex Culture and Market Reform in Shanghai."

"This is going to be very apparent in the future as poor men with few economic resources just won't find women," Farrer said. "Women won't benefit from this imbalance either. These are the women who are highly educated and have high career ambitions. They will be competing for men at the top of the social hierarchy."

More than ever online dating is going to become en vogue, Farrer says, with 384 million Chinese online according to the latest data:

"People will still meet in all kinds of ways but the development of the relationship online is more important than ever," said Farrer. "It is a way of overcoming shyness, maintaining constant communication with and monitoring of the partner and trying to develop a relationship when you don't have much time to see people. It is definitely extremely important."

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James Farrer is a speaker at the China Speakers Bureau. Do you need him at your conference? Do get in touch.

Why Barbie failed - Shaun Rein

fons.tuinstra@gmail.com (Fons Tuinstra) — Sat, 23 Jan 2010 13:16:00 +0000

Image via Wikipedia

The failure of Barbie in Shanghai, costing toy producer Mattel, has been told very often. Shaun Rein explains in Forbes why the strategy was good, but failed in the execution,.

With its retail sales growing by 15% in China in 2009 Mattel was right to look there for revenue growth for its Barbie brand. It targeted the right age and socioeconomic group. Middle-class Chinese women between the ages of 24 and 32 are especially optimistic. Their incomes kept rising to where they now account for about half of all household income, up from 20% in the 1950s. (See: "China's New Purchasing Powerhouse: Women.")

But, the execution was wrong, because Mattel failed to adjust its winning doll Barbie to the local taste:

Chinese women tend to like cutesy, girlish pink clothes (think Hello Kitty), not the sexy and skimpy kind Fields designed. Odd as it sounds, Snoopy-branded clothes, cartoon logos and all, are hot sellers for women entering the white-collar workforce.

Also, setting up a stand-alone store did not appeal to the Shanghainese audience:

... setting up standalone stores rarely works in China, as both Mattel and the British retailer Marks & Spencer( MASPY.PK - news -people ) have found out. It's usually better to build a large store within a mall or department store, where the foot traffic is. Because of snarling traffic and dizzying pollution, most Chinese prefer to go to one indoor destination rather than walk down the streets.
Shaun Rein by Fantake via Flickr

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Shaun Rein is a speaker at the China Speakers Bureau. Do you want to share his insights? Let us know.

Group purchasing: China's next export product - Sam Flemming

fons.tuinstra@gmail.com (Fons Tuinstra) — Sat, 23 Jan 2010 08:56:00 +0000

Sam Flemming by Fantake via Flickr

For newcomers in China group purchasing or tuangou is a revelation, depending whether you are buying or selling. Flash mobs of buyers, organized by the internet, appear in groups at stores and demand hefty discounts in exchange for quantity. Sam Flemming of CIC, who is analyzing the buzz on the internet, tells Scott Tong of Market Radio, this great concept might as well become China's next export product, starting with the Chinese in other parts of the world.

Sam Flemming: What good is the store, right? You can do all the research, you can talk to 10,000 other people who already have the product and give you their personal recommendation. It's fundamentally changing the rules of commerce.

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Sam Flemming is a speaker at the China Speakers Bureau. When you need him at your conference, do get in touch.

Group shopping tuangou from Marketplace on Vimeo.

China continues to expand abroad - Shaun Rein

fons.tuinstra@gmail.com (Fons Tuinstra) — Fri, 22 Jan 2010 13:31:00 +0000

Shaun Rein by Fantake via Flickr

Despite a larger number of setbacks, China will continue its expansion abroad, tells Shaun Rein the Reuters Insider.
China still has an enormous ability to expand, says Rein: "They are cash rich and very agressive." He expects China could do very well in the high-end goods market and in clean technology, two industries that have also high potential in China itself.
You can watch the whole segment here.

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Shaun Rein is a speaker at the China Speakers Bureau. Do you want to share his insights at your conferences? Do get in touch.

Too much money in the system - Arthur Kroeber

fons.tuinstra@gmail.com (Fons Tuinstra) — Thu, 21 Jan 2010 18:43:00 +0000

Arthur Kroeber by Fantake via Flickr

Most countries might be happy these days with double-digit growth of its GDP, in Beijing alarm bells when off when the government figures indicated a growth of 10.7 percent over the fourth quarter of 2009 while inflation is picking up. "There is too much money in the system," tells Arthur Kroeber the LA Times. He warns that the central bank might pull back loans even faster than it did already.

"This is quite serious," said Arthur Kroeber, managing director of Dragonomics, a Beijing-based economic research firm. "We now know they poured too much money into the system."

Kroeber said CPI could rise to about 5% by spring.

The unusually harsh winter has damaged produce supply, sending prices upward. Chinese are especially vulnerable to these shifts because they rely more on fresh groceries.

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Arthur Kroeber is a speaker at the China Speakers Bureau. When you need him at your conference, do get in touch.

Internet is freer than ever - Shaun Rein

fons.tuinstra@gmail.com (Fons Tuinstra) — Wed, 20 Jan 2010 10:38:00 +0000

The Google debate on China has opened the debate on how the country censors the internet again, but Shaun Rein asks in Forbes for a reality check: the internet in China is freer than ever, he says.

Seven years ago Chinese citizens couldn't access The New York Times. A year ago Wikipedia, the Huffington Post and WordPress were all blocked. All are accessible now. China's government fears content less than it used to. It fears technology, like Twitter or Facebook, that it believes dangerous elements can use to band together for protests like those that have occurred in Iran. It fears pornography as a polluter of morals. Such fears are undeniably disproportionate to actual risk, but no official wants to get the blame for having let something bad happen under his watch.

China will be a better place with Google's involvement, Shaun Rein continues and says China is acting like a teenage boy. But:

The U.S. and its businesses need to remain actively engaged with China. That will help it mature into the responsible, adult superpower the world needs it to become. The world cannot afford to disenfranchise and push away a nation that is like a powerful teenage boy looking for his place among the grown-ups.

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Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your conference, do get in touch.

Can foreign media make money in China? - Jeremy Goldkorn/Kaiser Kuo

fons.tuinstra@gmail.com (Fons Tuinstra) — Mon, 18 Jan 2010 08:33:00 +0000

Jeremy Goldkorn by Fantake via Flickr

Yes, says Jeremy Goldkorn, owner of the blocked website Danwei, although it ain't easy. Google is often
quoted as the latest casualty of Chinese protectionism, where foreign media can only work in the country, until get a certain level of success. Goldkorn tells The Guardian he disagrees and gives first an assessment of his own media operation.

"I don't think it's doomed," says Goldkorn. "I do think it's handicapped, castrated and crippled. It doesn't matter whether it's print, TV, internet or movies – foreign companies can make money but it's very difficult. There are enough regulations in China that potentially anything you do is illegal. If you annoy anybody, a competitor or a regulatory body, they can take you down. The environment is terrible here."

He notes, however, that Pearson, the owner of the Financial Times, and Condé Nast, the owner
Kaiser Kuo by Fantake via Flickr
of Vogue, are both doing well; Google had been "making a go of it – they weren't tremendously successful by their global standards but they weren't failing". The most successful, he thinks, is the publisher IDG: "If anyone has made a ton of money it's probably them. They've been here since the 80s."

Media watcher Kaiser Kuo sounds a bit more careful in the same article:

Kaiser Kuo, a Beijing-based technology watcher, says: "Commercial success is possible if you keep your heads down and play by the rules." But "there hasn't been a single unequivocal success I can point to. There are a combination of regulatory and commercial and strategic reasons. I wouldn't say abandon hope all ye who enter here."

There are also the problems of adapting to a very different market. The News Corporation-owned social network MySpace, Kuo points out, struggled to figure out what its "animating idea" was, given that the indie music scene which first propelled it to fame in the US doesn't exist in the same way in China.

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Jeremy Goldkorn and Kaiser Kuo are both working with the China Speakers Bureau. When you need one of them - or both - as a speaker at your conference, do get in touch.

The hacker attack on Google cs - Whodunit?

fons.tuinstra@gmail.com (Fons Tuinstra) — Sat, 16 Jan 2010 12:00:00 +0000

Image via Wikipedia

In the major upheaval caused by Google's announcement its servers had been attacked and it might for that reason leave China, two major assumptions surprisingly were not challenged. Since I have no inside knowledge of the attack I was waiting for others do poke some holes in superficial articles like this one in Computerworld, B ut nobody did yet, so I give it a shot.
I know it is almost impossible to prove who really did it, with a proof that would stand in any court. I hope the internet security community has more behind their sleeves than they have been showing up to now. It might not be clever to show all cards. When you develop technology to protect yourself against burglars, you do not want to spell out the details in public.
But let's turn the argument of our well-paid internet security experts around. The massive hacker attack must have been a major embarrassment for them. They are being hired to prevent that just that kind of attack, so not surprisingly they have to cover their back.
Not surprisingly, they say the attack was highly sophisticated. Of course, it was. How else could they have missed it? Perhaps they were not as sophisticated as they should be?

Next question: who did it? What do our less-than convincing experts say, liked here in ComputerWorld:

Carrillo is convinced that, given the sophistication of the code, it was produced with support from Chinese authorities. "This wasn't on the level of Metasploit," Carrillo said, referring to the open-source penetration testing framework whose exploits are often used by hackers to craft malware. "This wasn't something that a 16-year-old came up in his spare time."

When asked if the code quality pointed toward Chinese state support, Carrillo answered, "I would say so." He declined to elaborate.

With all due respect to the Chinese government, I would like to reverse the argument. If the attack was as sophisticated as the experts claim, it is a very solid proof the Chinese government was not involved. I do hope Mr. Carrillo can elaborate later a bit more, because today I do not buy his argument. "State support" is of course different from "government involvement", but something must have justified the angry reaction of Google.
The vague innuendo we get now, might backlash into the face of those experts, who are trying to cover themselves against accusations of gross under-performance.
We need names and (IP) numbers to make this case really convincing. As those familiar with China know, "Chinese state support" is just a simplification of anything that has to do with China. Was it the PLA? A group of students at state supported universities? Where it state-owned corporate giants? Or is Alibaba a better candidate?
Now, the number of internet users is nearing the 400 million, so only for statistical reasons the chance of any attack coming from China seems logical. If you look at the internet landscape in China, who would be likely candidates for such an attack?
I would rather look into the huge networks that have been developed in the World of Warcraft and other massive interactive games that have been so popular over the past years in China. Worried parents and authorities have been trying to stop the younger internet users from spending most of their lives behind computer screens. But by intensively participating in those games, China's internet users have learned to make important decisions, to develop team work all around the nation, developed leadership skills and talents traditional education is often not providing. They know probably better than the PLA how to conduct a modern war.
Of course, playing those games online can be fun, but has its limitation. What would be more logical than taking those games into the real world? The Western experts who talk about the 16-year old behind his computer, have no clue how huge, sophisticated and - in the end - dangerous those networks can be.
Apart from the kick itself, there could be a lot of reasons for those networks to take on the real world. Making a buck has always been a driving force for China's citizens, its companies and even government departments.
Where is the money? That question is very important in any issue concerning China and has not yet been addressed.

Branding: a matter for the rich - Rupert Hoogewerf

fons.tuinstra@gmail.com (Fons Tuinstra) — Sat, 16 Jan 2010 08:49:00 +0000

Image by Fantake via Flickr

Branding is high on the agenda of many companies in China, but its works mostly with the top-layer of rich Chinese, says Hurun-founder Rupert Hoogewerf to Bloomberg. In the Hurun magazine Hoogewerf lists their preferences: holidays in the US, watches from Cartier and Philippe Paket, they smoke Chunghwa and flight Air China.
Hurun interviewed 383 Chinese with at least 10 million Renminbi (1 million euro) in assets, part of a group of around 825,000 high earners.
Bloomberg:

“They have a greater awareness of brands,” Rupert Hoogewerf, Hurun’s Shanghai-based founder and chief researcher, said in an interview. “They are also more international-minded and keener to give their children a foreign education.”

Four of five surveyed plan to send their children abroad, preferably the U.S., for high school, undergraduate or post- graduate studies, said Hoogewerf. They are taking more time off, averaging 15 days a year compared with 11 days three years ago; each owns three cars and about five watches that cost $10,000 or more a piece, he said.

For a complete list of their favorite brands, read here.

Why is Google leaving China (part 3)

fons.tuinstra@gmail.com (Fons Tuinstra) — Fri, 15 Jan 2010 09:11:00 +0000

Image via CrunchBase

Google committed an act of war against China, says Shaun Rein in Forbes in the third day after the US firm announced it would leave China after its Gmail service got attacked by what other says would be Chinese forces. The media upheaval still shows no sign of abating.
Let's listen first to the astute Shaun Rein in Forbes. Google is threatening China with chaos and instability, a severe misjudgment of what is important in China:

China's leaders fear instability more than anything else. Contrary to what most Americans think, most of China's leadership and their parents suffered terribly in the chaotic time of the Cultural Revolution...

In this context, Google's ( GOOG -news - people ) actions are as irresponsible as they are brazen. Does anyone really think the Chinese government is going to bow down to the demands of a foreign media company? Google's move is similar to failed U.S. economic sanctions against Iran, Myanmar, Cuba and North Korea. ...

Has Google really thought through the implications of its actions, beyond just giving up the world's fastest growing digital advertising market and the welfare of its employees and legal representatives in China? Or is this the impulsive move of an arrogant and immature leadership team used to getting its way?

Bottom line, according to Shaun Rein: Google was unable to beat its major competitor and is making things even worse by backing out in such a clumsy way:

Kai-Fu Lee, Google's hubristic former China president, failed to make Google more competitive. In our interviews with young Chinese graduates, they said they would rather work for Baidu than for Google, as I wrote in "Three Myths About Business in China." They want to be where there is no glass ceiling, and where services are tailored for the Chinese. Baidu and companies such as Sina and Tencent have been taking advantage of Google's slowness to create new China-friendly services...

Google's actions in China not only imperil its own bottom line; they also threaten to start a slowing of Internet and media reform. Much as economic sanctions fail in statecraft, Google's actions will end up doing little good for either its investors, its partners or, perhaps most important, China's citizens.

In the Washington Post, also Kaiser Kuo warns against the possible negative fallout from Google's decision to possibly leave China, a risk that has been severely underestimated by Google:

"This would adversely affect a lot of people, not just the technorati elite that is Western-oriented anyway," said Kaiser Kuo, an independent technology consultant. "The government could face a serious backlash this time."

Although, Jeremy Goldkorn tries to find in the same article also a positive side:

"This will make the extent of Chinese censorship a lot clearer, even to ordinary Chinese people who are not aware of it," said Jeremy Goldkorn, a China Internet specialist who posts on Sina's blog site and runs a Web site called Danwei, which has been blocked since July.

In AdAge Kaiser Kuo explains why the arrogant attitude has brought Google in a no-win situation from the very start:

"Their chief problem was the idea they could come into the market without doing marketing and expect to replicate the miraculous success they had enjoyed in the U.S. They did no marketing," said Kaiser Kuo, a Beijing-based consultant for Youku.com and the former of head of digital strategy at Ogilvy & Mather in China.

"They just had a name that was hard for Chinese to pronounce and harder to spell," Mr. Kuo said.

Sam Flemming of the CIC, a research firm analyzing the buzz on internet joins the argument, also in AdAge, and explains why domestic competitor Baidu was doing so much better:

"With its massively popular Tieba forums, a question-and-answer service and a wiki, Baidu leveraged Chinese netizens' natural propensity to share and create content and seamlessly integrated it in to the overall search experience way before Google's attempts," said Sam Flemming, founder and chairman of CIC, an internet research and consulting firm in Shanghai.

"Even Google's attempts in the West at integrating social media and search fail in comparison to
Shaun Rein by Fantake via Flickr
what Baidu is doing in China," Mr. Flemming said.

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Shaun Rein, Kaiser Kuo, Sam Flemming and Jeremy Goldkorn all belong to the China Speakers Bureau. When you are interested in having them as a speaker at your conference, do get in touch.

Why is Google leaving China (part 2)

fons.tuinstra@gmail.com (Fons Tuinstra) — Thu, 14 Jan 2010 09:35:00 +0000

Sergey Brin by ptufts via Flickr

We are in the second day after Google announced it might withdraw from China after massive attacks on email account of human rights activists. While not much more information has come to the surface, the main question that was posed yesterday did not get an answer: Is Google packing its bags for commercial reasons and only uses moral indignation to hide its failure in China?
A rather murky - and I believe partly incorrect - piece in The Guardian suggests even that Google founder Sergey Brin fed that moral indignation and points at his background as a Russian refugee.
The counter argument, defending the moral indignation, was that Google's market share was climbing to the 30-35 percent, compared to its major domestic competitor Baidu. Nevertheless, as noted in the Guangzhou’sSouthern Metropolis Daily, translated by the China Media Project, China counted only for one percent of Google's results. Getting internet traffic, or turnover as other industries have noted, is simply not the same as making a living.
Unfortunately, even when it comes to the market share, the results of Google censored .cn search engine and its uncensored .com search engine are consolidated. Only a few years ago, given the choice between a censored and an uncensored Google search engine, most Chinese users preferred the uncensored one. Traffic to its censored search engine was not even symbolic. The main servers for the .com, as the servers of the attacked Gmail servers are not based in China, so Google's departure would nothing be than a rather symbolic gesture. Indeed, there seem very little commercial reasons for Google to say and now it would at least temporary enjoy to be on the right side of a flare of moral indignation.
Some people have asked, why these entries are called "Why is Google leaving", while that decision has not yet been made. As I point out in the comments at part 1, this is an assumption, an educated guess. I will add the word "not" if I'm wrong.
Sorry about the rant, let's turn to the other commentators and see what they added in the part 24 hours.

Let's first point at a much better contribution, with many contradicting statements, by The Guardian, a cool overview of video comments, including Michael Anti, Isaac Mao, Kaiser Kuo, Jeremy Goldkorn and Jeff Jarvis.
In USA Today Shaun Rein argues that even if Google would have had a future in China, the company has now blown away those chances by its recent action:

"Google's dead in China," predicts Shaun Rein, managing director of China Market Research Group, a research and consulting firm in Shanghai. Even if the company were to stay on, no one in China "would have the confidence to do marketing campaigns" with them.

In Computerworld, Shaun Rein speculates about the, indeed rather unlikely, chance all Google services in China might be blocked:

There is also a concern that all Google services could be blocked in China if the company violates Chinese regulations by stopping its censorship of search results, said Shaun Rein, managing director of China Market Research Group in Shanghai. Offerings like Gmail, Google Docs and Google hosting for businesses all have users in China and could be affected by a move to block the search giant's services.

In CNN, Jeremy Goldkorn defends Google's move, giving the hassle the company got in the recent past:

"Google has been subject to an inordinate amount of harassment in China over the past year, ranging from blocking and interruption of services like Google Documents and G-mail that are not hosted in China, to state-owned broadcaster CCTV accusing [Google] of being propagators of pornography."

He adds: "The last six months have seen a huge increase of censorship on domestic sites and a noticeable attitude by the Chinese government saying they don't really care what foreigners think.

"I imagine the Chinese government's reaction is going to be 'Well, if you don't like our laws, get lost.'"

In The Washington Post, Jeremy Goldkorn sees a positive twist for the future:

"This will make the extent of Chinese censorship a lot clearer even to ordinary Chinese people who are not aware of it," said Jeremy Goldkorn, who does the blog and runs an Internet research firm. He also runs a Web site called danwei.org, which has been blocked since July.

Tom Doctoroff, in the Wall Street Journal, has a look at the figures for Google in China.

Google enjoys a 35% market share in China, a figure that is growing, but its profitability is open to question, says Tom Doctoroff, managing director of J. Walter Thompson. Chinese Internet users engage in relatively little e-commerce, which stymies the ability of companies like Google to make money. "We should not ignore the operational difficulties that Google has had in penetrating this market," Mr. Doctoroff said.

In Marketplace, Kaiser Kuo goes for the final knockout:

We're talking about a company where their main domain name, Google.com, was something that most Chinese Internet users just simply couldn't spell.

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Jeremy Goldkorn, Tom Doctoroff, Kaiser Kuo and Shaun Rein participate in the China Speakers Bureau. When you need them at your conference, do get in touch.

Why is Google leaving China (part 1)

fons.tuinstra@gmail.com (Fons Tuinstra) — Wed, 13 Jan 2010 09:23:00 +0000

Image by Getty Images via Daylife

The decision by Google to leave China, after hackers had tried to enter email account from Chinese human rights activists is still very fresh, but our speakers are out in force to discuss the consequences. Was is all a carefully planned PR-move by Google, just waiting for the right moment to pull out? Or was this genuine moral indignation about a vicious act?
Jeremy Goldkorn notes in The Guardian that comments at Sina's microblogging service were largly in favor of Google's move:

Many Chinese internet users this morning have praised Google for its principled stand. The top trending topic on the Twitter-style microblogging service of Chinese portal Sina.com is "Google considers withdrawing from China". Based on a scroll through some of the more than 60,000 comments, the reactions seem overwhelmingly in support of Google.

Goldkorn is still eagerly waiting the fallout, he writes:

The fallout will be interesting. I can't recall a single case of a major international company with operations in China taking a stand like this. As someone who agreed with Google's reasoning when it entered China, I also support this move. If it cannot operate here in accordance with its global standards, it should leave. I have given up on getting my own website unblocked by the government and am resigned to the fact that it's only accessible to people who are outside China or know the technical tricks to get over the Great Firewall.

Kaiser Kuo points out to Reuters that Google was having more problems in China, that were not only caused by government action:

"There were a lot of problems that hamstrung Google, but not all of them had to do with Google being picked on by the Chinese government," said Kaiser Kuo, China Internet commentator and former director of digital strategy at Ogilvy China.

Shaun Rein is even harsher in his comments to AFP:

Shaun Rein, managing director of China Market Research Group in Shanghai, said Google might be using the cyberattacks as an excuse to exit China.

"I think Google is looking for a face-saving way to move out of China," Rein said.

"It hasn't done well in China -- Google in China has been a complete disaster compared with Baidu."

The debate will continue, so much is certain. Is the government going to act? Can it actually close down all Google sites? Or is it just going to ignore Google?

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Jeremy Goldkorn, Kaiser Kuo and Shaun Rein are all speakers at the China Speakers Bureau. When you need one of them - or all three - at your conference, do get in touch.

Microblogging "out of the bottle" - Jeremy Goldkorn

fons.tuinstra@gmail.com (Fons Tuinstra) — Tue, 12 Jan 2010 09:52:00 +0000

Image via Wikipedia

China's internet censors might have blocked microblogging service Twitter, but since domestic services have taken over, the ghost is out of the bottle, tells internet watcher Jeremy Goldkorn USA Today China's Sina is offering a partly curtailed and closely monitored twitter-service, but it has not stopped its popularity.
USA Today:

China shut down Twitter access after it was used to transmit images and messages about riots against the government in western China. YouTube and several other social-networking sites remain blocked, too. But there are many sites that the "Great Firewall of China," as it is widely known, has not impeded.

Even on those sites, there is "more debate and criticism by Chinese people than at anytime in history," China Internet specialist Jeremy Goldkorn says.

"You're seeing networks of people forming links outside the state, and this alarms the state, so they want to monitor microblogging closely," says Goldkorn, whose Danwei website also was blocked in July. "The government is determined to control the discourse on the Internet, and is in a very censorious mode."...

Beijing's chief concern lies in the Internet's power to mobilize, Goldkorn says. Despite the government's efforts, "the genie is out of the bottle."
Image by Fantake via Flickr

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Jeremy Goldkorn is a speaker at the China Speakers Bureau. When you need him at your conference, do get in touch.

Tell James Chanos: no bubble in China - Shaun Rein

fons.tuinstra@gmail.com (Fons Tuinstra) — Tue, 12 Jan 2010 08:34:00 +0000

Shaun Rein by Fantake via Flickr

Famous economists take very different positions on the questions whether China's economy is a bubble or not. In Forbes Shaun Rein explains James Chanos China has no bubble. Making some bucks on telling the world about China's demise, economically or otherwise, has been part of China's upsurge. In the year 2000 the best-selling author Gordon Chang predicted in his book "The Upcoming Collapse of China" a fast collapse.
Major flaw of Chang's and other doomsday scenario's: they were wrong. James Chanos now jumps on this lucrative bandwagon and Shaun Rein is rightfully setting him straight.
Shaun Rein:

Chanos called it right on Enron and Tyco ( TYC - news -people ) before they collapsed. He is no lightweight observer of the economic scene. However, he is wrong about China. For once I agree with the famed investor Jim Rogers, who cofounded the Quantum Fund with George Soros. He says China is not in a bubble and adds that he finds "it interesting that people who couldn't spell China 10 years ago are now experts on China."

Rein explains that the rise of real estate is China is different from the US and Dubai, because owners have to pay a big chunk of their mortgage upfront as downpayment.

Also, mortgages are not being spliced up and packaged and securitized by the likes of Citigroup ( C - news - people ) and Bank of America ( BAC - news - people ). Instead mortgages are held by the original lenders, the way they were in the U.S. before financial innovation and lack of regulation broke down the old rules.

Income in China has been underreported, making the real estate industry dramatically different, argues Rein:
If anything, incomes are grossly underreported in China. A simple look at how accounting works will show why. Whereas in the U.S. individuals must report their income to the Internal Revenue Service every year, in China all individual tax is reported and paid for by companies, except for that of high earners. Many Chinese companies limit the tax they pay by reporting low salaries and then paying their employees higher amounts while accounting for the difference as business expenses like phone bills. The employees are happy because they make every bit as much as they were promised, and the companies are pleased to lower their tax exposure.

Also, many companies pay for housing and cars for their employees, a holdover from the old system of state-run businesses. Most Western economists don't count those expenses as income, but they should. Deceptive accounting of income is so widespread that the government has announced plans to tax some business expenses in state-run enterprises--the kinds of expenses that let executives pay taxes on earnings of $300 a month while living in multimillion-dollar homes and driving Mercedes.

More in Forbes.

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Shaun Rein is a speaker at the China Speakers Bureau. Do you want him to share his insights at your conference? Do get in touch.

China not even close to real estate bubble - Arthur Kroeber

fons.tuinstra@gmail.com (Fons Tuinstra) — Mon, 11 Jan 2010 07:45:00 +0000

Shanghai Fantake via Flickr

Going against the comments of many fellow economic analysts, Arthur Kroeber simply does not believe China is even close to a real estate bubble, he tells the Washington Post. There is still too much room to grow, he says.
The Washington Post:

Arthur Kroeber, a Beijing-based analyst and managing director of Dragonomics, said China's economy is "not even close" to being a bubble like those seen in Japan, which endured more than a decade of sluggish growth after prices retreated, or in the United States, which helped bring about the current sharp global downturn.

"At some point the music will stop," Kroeber said. But he predicted that it would not happen in China for at least 15 years, when urbanization slows.

The bigger real estate problem in China now is access to housing. For many people -- especially the young or people moving to the cities from rural areas -- the dream of owning a home is more and more difficult to attain.

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Arthur Kroeber is a speaker at the China Speakers Bureau. When you need him at your
conference, do get in touch.

Labor issues keep Xinhua busy

fons.tuinstra@gmail.com (Fons Tuinstra) — Fri, 08 Jan 2010 10:50:00 +0000

Signals from Beijing via Wikipedia

Reading the official Chinese media is a special art, where not what they write, but what they write about is often more important. Already in December I noted that labor issues, who were mostly kept out of the official media for more than a year, were back on the agenda.
For another project, the WageIndicator, I'm following labor-related news in 46 affiliated countries and it is just amazing how often Xinhua, the official Chinese newswire of the central government, is paying attention is labor issues abroad. Those labor issues are not yet that popular domestically, although they are not off limits anymore.
Here is the latest one on a strike in South Korea, where KIA workers went on strike over wages.
Turkish civil servants in a strike? Xinhua is on top of it. A slow-down action at the public transportation in Budapest? Xinhua gives you the latest details. The Australian trade union is giving out a press release. Xinhua has it.
Maybe I'm reading too much in it, but it looks like a way to make the minds of foreign investors ready for trade unions activity, collective bargaining and even strikes in China.

Expanding waistlines change China - Paul French

fons.tuinstra@gmail.com (Fons Tuinstra) — Wed, 06 Jan 2010 10:18:00 +0000

Image via Wikipedia

Chinese are getting wealthier and fatter, visitors of the country can see. Retail analyst Paul French just finished a major report on "Fat China" and tells Shanghai Urbanatomy about his study into Chinese obesity. Famine has definitely become a feature in the country's history.

“In the West, obesity has become a problem of the poor,” he says. “In the US and UK, places like McDonald’s have become middle-class no-go zones; it’s really about poor people and their diet. Here in China though, it’s about middle class and wealthy people. So in that sense it’s turned on its head.”

The other big difference with the West is that China’s obesity problem is not a nationwide one. “It’s an urban problem, not a rural one,” says French. “But it’s starting to spread. We’re now seeing obesity rise in tier two, tier three cities.”

French says the main cause of obesity in China is due to increased consumption. “Chinese are drinking more beer, they’re drinking more fizzy drinks, they’re eating more cakes and sweets and pre-packaged foods. The major issue is volume; people are just eating more. More of everything. Beef is in the diet now. There’s a lot more in the diet that wasn’t before. People are eating more of their Chinese diet and more Western food on top of that.”
Image by Fantake via Flickr

More in Shanghai Urbanatomy.

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Paul French is a speaker at the China Speakers Bureau. Do you need him at your conference? Do
get in touch.

Online marketing is lagging behind - Shaun Rein

fons.tuinstra@gmail.com (Fons Tuinstra) — Wed, 06 Jan 2010 09:51:00 +0000

Image by Fantake via Flickr

Large companies are only spending a fraction of their marketing budget on digital initiatives, while most of the Chinese consumers can be found behind their computer screen or on their mobile, says Shaun Rein in an article describing three major consumer trends for Forbes. "Through the first nine months of 2009, China's 380 million netizens spent $25 billion online, twice as much as a year before."
The article is based on 5,000 interview in 15 cities by his research firm, the China Marketing Research Group.
Shaun Rein:

In China, most multinationals only spend 2% to 3% of their marketing budgets on digital initiatives; 8% to 12% is typical in the U.S. This makes no sense, for Chinese spend relatively more time online than with other media like TV or print, compared with American consumers. Logically, brand managers should spend much more online.

Why don't they already? Part of the blame lies with their advisers. Most advertising agencies have limited digital marketing capabilities and relegate their online campaigns to junior people. They also prefer to work with television and sporting events, where there is more money and more personal visibility for them. Moreover, media buyers in China prefer to spend your money where it benefits preexisting relationships of theirs, or where they can get preferential treatment such as rebates.

More in Forbes with also analysis on Chinese and foreign brands in China: "Are you scared of the Made in China label? So am I. So are most Chinese."

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Shaun Rein is a speaker at the China Speakers Bureau. You want him to share his insights at your meeting or conference. Do get in touch.